CFD Scams

CFD Scams

A Guide to CFD Scams

Along with other types of online fraud, such as bitcoin scams, CFD scams are a growing problem. Government regulatory organizations have urged consumers to use care when investing online given the upsurge in the number of fraudulent schemes masquerading as legitimate brokers. To trade CFDs securely, it is essential to work only with a regulated broker and a service that has a track record of success and reliability.
Broker Complaint Registry provides guidance that will help you avoid CFD scams. We carefully examine investment and financial services and can advise our clients on safe trading. If you have lost money to a CFD Scam, we can refer you to experts in the field who will help you file a complaint and can advocate on your behalf to help you retrieve your funds

What Are CFDs?

CFDs are also known as Certificates of Deposit. These work as contracts between the seller and the buyer and are an agreement that the seller will pay the buyer the difference in value between the asset at the time of purchase and specified time in the future. This is a convenient form of trading that allows people to trade an asset without actually buying it.
CFD trading appeals to many people because they do not have to hold stock or similar assets. It is convenient for people in countries where it can be hard to buy stocks directly on the New York Stock Exchange, for example, and they instead trade according to the the value of the assets at various times. Besides, CFDs can also be cheaper than stocks.

Why Are CFDs Controversial?

CFD trading is not allowed in the United States. This means that any legitimate CFD broker is not allowed to accept clients from the US. One red flag for a scam CFD broker is if they try to sign up U.S. clients even though they are not licensed to.
The reason CFD trading is banned in the U.S. is that the Securities and Exchange Commission is concerned that CFD trading takes place apart from a registered stock exchange and outside of the US government regulations. There have been numerous laws passed, such as the Dodd-Frank Act that is intended to protect traders, and any trading outside of registered exchanges would skirt these laws.
Some interpret the U.S. ban on CFDs as US regulators simply wanting to retain control over trading in the U.S. whereas others feel that concerns about CFD trading area well-founded. Without regulations, trading can be rife with abuses.
For instance, CFDs are based on contracts between the buyer and the seller and not the objective price of a stock. Brokers can more easily manipulate these contracts than they can dispute the price of a stock at the time it is sold. Additionally, CFDs often involve high leverage which can lead to significant losses.
There is nothing inherently wrong with trading CFDs in areas where it is legal. However, it is important not to simply dismiss concerns expressed about this kind of trading and understand the risks before engaging in CFD trading. It is not as tightly regulated as other types of trading and it is essential to work with an honest broker who is licensed and a track record of providing solid returns for clients.

Pay Attention to These Tips for Selecting a CFD Broker

It is always important to choose a licensed, trustworthy broker, but in the case of risky CFDs, it is even more essential. You are making contracts with the broker for returns based on the value of the assets at contract time, so you need an honest broker. With so many CFD scams, it is important to take the time and research each broker thoroughly before making a choice.
Select a CFD broker with the following:
  • A license from a top-tier regulator
  • Transparency about all fees
  • Accurate, verifiable contact information and address
  • Strong communication
  • Realistic claims
  • A strong reputation
  • An advanced trading platform
  • A reasonable withdrawal policy
It can take some time to research a broker to ensure that they are the right choice. CFD scam brokers may post fake addresses or claim they have a license when they do not or are bolstered by fake testimonials and self-generated reviews. Invest the time to do searches to confirm all of the information on the site and ensure all fees, spreads, commission, and withdrawal information is clearly stated.

Signs to Avoid a CFD Broker

Unfortunately, there are many CFD scams and examples abound of brokers consumers should avoid. Do not sign up with a broker who has any of the following:
  • No license or a license from a low-tier regulator
  • Extravagant claims about outsized returns
  • Very little information on the website about fees, commissions, and spreads
  • An address that is not real
  • Claims they are allowed to release funds according to their own discretion

Filing a Complaint Against a CFD Broker

Even with due diligence, a trader can fall into problems with a broker, and not just in the case of actual CFD scams. If a broker will not allow you to withdraw money, that is usually a cause for concern and it is important to take action. You can file a complaint with a regulator or authorities if you suspect a CFD scam, but you will need extra guidance when it comes to actually retrieving your funds. This is where Broker Complaint Registry can help you with a referral to fund recovery experts.

Have You Lost Money in a CFD Scam or Crypto Scam? BrokerComplaint Registry Will Help

It can take some time to research a broker to ensure that they are the right choice. CFD scam brokers may post fake addresses or claim they have a license when they do not or are bolstered by fake testimonials and self-generated reviews. Invest the time to do searches to confirm all of the information on the site and ensure all fees, spreads, commission, and withdrawal information is clearly stated.